Transaction Overview
The Bank of Cyprus (BoC) announced on Thursday the successful launch and pricing of a €300 million unsecured, subordinated Tier 2 Capital Notes issue under its €4 billion Euro Medium Term Note Programme, scheduled for September 10, 2025. The transaction garnered strong investor interest, reflecting deep market confidence in the bank’s financial prospects.
Investor Demand And Market Reception
Demand surpassed expectations with over 100 institutional investors participating, driving the final order book to exceed €3 billion—more than ten times the issued amount. This overwhelming response underscores robust investor confidence from both local and international markets.
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Pricing And Yield Improvements
The strong demand allowed BoC to secure a final pricing spread of 195 basis points, notably tighter by 35 basis points than the initial indication. The effective yield of 4.321 percent compares favorably against the initial rate of 4.67 percent, outperforming the bond currently being refinanced and even recent Senior Preferred bond issuances. Analysts note that these improvements position the bank’s offering competitively against Greek bonds.
Bond Specifications And Redemption Terms
The new notes, priced at 99.632 percent with a fixed annual coupon of 4.25 percent, will reset on September 18, 2031, and mature on September 18, 2036. BoC has retained the option to early redeem the notes anytime within a six-month period commencing March 18, 2031, subject to regulatory consents. Settlement is slated for September 18, 2025.
Market Ratings And Capital Impact
Moody’s Investors Service Cyprus Limited rated the new notes Ba1, further solidifying market confidence. These notes will be listed on the Luxembourg Stock Exchange’s Euro MTF market. Proceeds are set to be on-lent to BoC Public Company Limited for general funding purposes, qualifying as Tier 2 capital. The issuance is expected to bolster the group’s Total Capital Ratio by approximately 300 basis points while maintaining an optimised capital structure.
Additional Strategic Moves
In related developments, BoC has invited holders of its outstanding €300 million Fixed Rate Reset Tier 2 Capital Notes—callable between April 23, 2026, and October 23, 2026—to tender their notes at a purchase price of 102.3 percent of the principal amount. Additionally, the bank intends to repurchase its existing subordinated bond maturing in 2031 at the same pricing, further streamlining its debt profile. The transaction was coordinated by stalwarts such as BofA Securities Europe SA and Goldman Sachs Bank Europe SE, with additional participation by Barclays Bank Ireland PLC, Citigroup Global Markets Limited, Morgan Stanley Europe SE, and Cisco acting as Co-Manager.
